Crowley Maritime has signed a letter of intent to acquire Florida-based SeaFreight Agencies, further evidence of consolidation in the Caribbean container sector.
“Both companies are currently working through the due diligence process in anticipation of executing a purchase sale agreement by September 30,” said Crowley in a statement sent to IHS Maritime.
“Many of us recognise that our industry is undergoing fundamental change, which emphasises the importance of scale and the wisdom of consolidation,” said SeaFreight president Roland Malins-Smith. “We believe that this move is in the best interest of our customers and our employees.”
According to Steve Collar, Crowley’s senior vice-president and general manager of the Caribbean and Latin America, “This acquisition represents a great opportunity for Crowley to grow its footprint and capabilities in the Caribbean Basin.”
The likely acquisition of SeaFreight by Crowley follows the 2014 purchase of Tropical Shipping by Saltchuk (parent of Sea Star) and the 2012 acquisition of Bernuth by King Ocean. In addition, the Puerto Rico Jones Act trade was effectively consolidated when Horizon Lines ceased service to the island at the end of last year. Volumes formerly served by Horizon shifted to Crowley and Sea Star, which have added incremental barge and vessel service to the route prior to the arrival of their newbuilds in 4Q15-4Q17.
Beyond company-level consolidation, Caribbean operators are coming together via the heightened use of vessel-sharing agreements and slot-charter deals. “That will continue,” predicted SeaLand CEO Craig Mygatt in a recent interview with IHS Maritime.
“You don’t need two 1,700 teu ships going to a port if one will do, even if you are two different carriers, because you will either block each other or you will be suboptimal going into that port. Both ships sailing at 60% doesn’t make sense if you can get one ship going in at 90%,” said Mygatt. “Even if you’re with a competitor it makes a lot of sense economically, because prices are stagnant and if you don’t do anything cost-wise, you’re going to expose yourself quite a bit.”
This post was sourced from IHS Maritime 360: View the original article here.
